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28 December 2010

Did any brainiac ever think that the reason California A tracks have such great handle is because they have one of the lowest takeouts in North America? I don't think anyone who voted for the takeout hike that begins January 1 gave it any consideration.

The winter meet began at Santa Anita on Sunday. Optimism was all over the place. I listened to a segment on the Steve Byk radio show and you would think that the move back to the dirt was more significant than if man were to land on Mars. BTW, don't waste your time listening to Byk, I find him to be a nauseating anti-horseplayer cheerleader for tracks and horsemen groups. Roger Stein, on the other hand is well worth listening to each week. He gets it. Byk doesn't.

With all this anticipation and exuberance, handle must have gone through the roof on Sunday. It didn't, far from it. All source handle was off over 21% from the previous year. Granted there were weather issues on the East Coast, and they did have an extra race the year before. However, in 2009, Santa Anita signal wasn't being picked up by the Mid Atlantic Co-Op. That cost Santa Anita anywhere between 5-10% in handle last year. Handle was back to 1992 levels, and that doesn't even take into account inflation.

Things were a little better yesterday. Handle was only off 2%. But they ran an extra race yesterday compared to the corresponding first Monday of the meet last year.

So who exactly was demanding a move back to the dirt? The horsemen and a few existing Horseplayers.

Existing Horseplayers will look for all sorts of excuses as to why they lose money. 99% of them lose. Artificial surfaces in California was just one more scapegoat for some existing Horseplayers. Bottom line, the movement back to dirt didn't create any new Horseplayers. At best it could shift betting money from one track back to California.

Excuses from Horseplayers stem from them losing money or not winning enough on the day. Sure, they are valid, but in the end, the overwhelming majority of Horseplayers will lose. What matters is how long they last. The longer they last, the more likely they are to expose others to the game, the quicker they lose, the more excuses they will make, the more negative they will be, and the less likely they are to expose others to the game.

Sidetracking a bit. My father was a $2 bettor his whole life. Almost never missed a day betting. He used to make $500 to a couple of thousand almost every year. But I remember him going bad for about 3 years (breaking even or losing a bit on the year). He started blaming the cat. "Since I got this cat, I can't win anymore. The cat is a jinx. She is looking at me right now with her evil eyes." Cats or polytrack. If a Horseplayer starts to lose faster, they look for excuses.

Back to California. The timing was bad for this switch as it comes just a few days before takeout is hiked on all exotic bets in California. This has caused talk of a Player's Boycott.

Horseplayers who 1) Understand that takeout is the barrier between winning and losing and/or 2) Care about the future of horse racing, have already stopped playing California tracks. Many more are expected to stop or slow down once the boycott is officially called.

Even without a boycott, handle is going to go down the tubes in California. There is going to be less value on most combinations once takeout rates go up 9-14%. Price sensitive players who still believe they can make money will bet less, and in the meantime, the dummy money will lose quicker and some of it will disappear creating less value.

In the end. No Horseplayer will have a chance at beating California in the long run (not that very many are today).

Let me explain why this is a 9-14% increase in takeout and not a 2-3% hike that those not in the know are preaching:

Takeout is increasing on exactors and doubles from 20.68% to 22.68%. So if $100,000 is bet in a double pool, the track is now takeout $22,680 instead of $20,680 which represents an increase to the track of 9.7%.

Now lets look at it from the bettor's long term perspective. If the bettor makes $100,000 in double bets over a period of time, the bettor has to overcome $22,680 being taken out as opposed to $20,680. That means they are expected to lose collectively close to 10% more than they lost previously. That is if handle remains the same. It won't because that extra 10% lost will do a lot of wear and tear on the existing Horseplayer's bankroll.

It is is greater on other exotics which shoot up from 20.68% to 23.68%.

If you still don't get it. Lets say you have a $100,000 line of credit and you are paying interest only. If interest rates go up from 3% to 4%, you are not paying an extra 1% per year, but an extra 33%, as your yearly payments just rose from $3,000 to $4,000.

Personally, since Los Alamitos rose takeout early last year, I bet one card there. I felt very dirty afterward even though I broke around even. I won't do it again. And I'm not about to feel dirty by betting on any California thoroughbred track until California does the right thing and the takeout is at least rescinded.

I'm not alone here. There are a lot of pissed off players who are passionate about the game willing to treat California racing as "entertainment only."

I don't bet on Family Guy, Dexter, Two and a Half Men, and now California racing. I only watch them for entertainment purposes only. I have to tell you though, California racing gives me the least entertainment value of these four "shows" by a very good margin.

I'll watch Tampa Bay, Hawthorne, etc. for gambling purposes. Oh, and I bet as much as I did when I was playing California. It just goes to other tracks.

Oh, and blaming the weather on Sunday?

Turf Paradise a year ago last Sunday: $1,212,049
Last Sunday: $1,552,112

Even Golden Gate was up a little. Apparently, HANA forgot to tell its members that Golden Gate is in California:) Actually, the Boycott still hasn't been called yet, and the takeout hike doesn't happen until January 1st. All I can say is look out below.

I'm sure the handle numbers from the first day are helping those horsemen on the fence who were thinking about sending a few horses to California, make up their mind.

Field size looks like it will remain on the weak side in California, and there just won't be any value in the majority of races thanks to the hike.

Canadian Horseplayers Advocacy Group founder Eric Poteck now has a regular article up at Down The Stretch Newspaper Online. In the current issue he tackles the integrity issue of promoting fictitious payoff prices. For example, when there is only $35,000 available in a superfecta pool at Woodbine, and someone has the pool for 20 cents. The price promoted is $175,000 (which is the dollar price). It is blatant false advertising.

In a related topic. Does anyone proof read the HPI Quarterly?

Though the WEG Pick 4 has a 21.7 per cent takeout, Martin (Jamie) said the track now honours lower takeout rates for other tracks’ Pick 4 wagers, some as low as 15 per cent.

“So, we’ve made it attractive for people not only to play our own, but to play all the other ones,” Martin said.

“I think it’s a good bet,” Hamilton said. “It’s better than the high-percentage takeout we have with superfectas (23 per cent),...”
*********************************************Note to editor: Takeout on superfectas at Woodbine is 26.3% and it is 25% on Pick 4's. The 2% that is tacked on for the Horsemen, and the 1.3% to the government on each wager is still part of the takeout.

Note to Jamie Martin: How about honouring all lower takeout rates, including triactors and superfectas as well? Woodbine has no right to partner themselves with winning bets made by their customers.

In 1968, horse racing in Toronto was in its glory days. People were in the stands, and they came back for more because takeout was lower and you could only bet WPS on most races. Bankrolls lasted. There were even some known winners. The public was addicted. Great stories from that time. Here is one. Just remember, this story is not supposed to endorse the concept of hidden ownership. It was hip in the 60's. It can be costly today.

19 December 2010

Just in case you haven't heard yet, California thoroughbred track takeout goes up starting on December 26th January 1. Takeout on doubles and exactors will now be 22.68%, while other exotic bets will now be "taxed" at 23.68%. The takeout on all exotics used to be 20.68%, which used to be on the relative low side. It was one of the biggest reasons why California A tracks had such good handles relative to the industry.

An organized Players Boycott has been started at PlayersBoycott.org sponsored by HANA (Horseplayers Association of North America).

I want to reiterate what I've written in previous post that I can't fault the horsemen groups for pushing the takeout hike because the horsemen get the entire proceeds from the hike. What is does is change the cut from takeout of what goes towards purses. If the cut used to be around 45%, it is now over 50%.

Horsemen groups typically do not think of the long term welfare of the game. So their take it while you can attitude is expected. Most horsemen have no clue when it comes to the gambler, especially when it comes to Economics 101 and the concept of optimal pricing.

The blame clearly lies on the State of California and the racetrack owners. Why do horsemen groups have a say in the pricing of the product to the bettors? It makes no sense. It is akin to dentists setting prices at amusement parks. It isn't their business at all.

It is their business to negotiate what cut they get from the betting proceeds...this is much different than having a say in takeout. This power to be involved in what the takeout is must be evoked everywhere.

As for the track owners. I cannot believe their stupidity. Lets say handle drops 15% because of this takeout hike. Before, it was shared with the owners (purses would drop because of it). But now, the owners will absorb the entire loss on the first 15% decrease (purses will only have to go back to 2010 levels). Any losses above 15% in handle will be shared by tracks and purse losses.

The track owners, if they were under proper advisement, should have just changed the cut so as to increase purses. They are going to look like dimwits when the dust settles. They did have a choice.

It is the height of arrogance/idiocy to believe that handle won't suffer when prices go up to the consumer. Will going back to dirt at Santa Anita help? Maybe a little, but there are many tracks out there that run on dirt, some have actually dropped takeout recently. Field size? Maybe to begin with, but California has attracted a pool of horses who prefer artificial surfaces over the years. The different surfaces do matter to quite a few horses. That is going to eventually hurt the horse population going forward. Other than a few outfits bringing in some horses, I don't see much of an attraction to go to California for basically the same purses available at Penn and Philly, especially at around $100 a day in day rate versus $50 to $70 at Penn and Philly.

Boycott or not, those who bet California tracks will be lasting a lot less. If someone used to bet $100,000 a year on California exotics, they will now be out $2,500 a year, or $50 a week. The $2500 could be the difference in winning or losing or breaking even. It could be enough to turn the player off completely.

Smaller players will also not last as much. They will wind up going less. They will wind up taking their family or friends to the track or exposing them to racing on TV a lot less. This means the likelihood of newbies coming to the track and the growth this brings will be close to non existent.

The dummy money will dry up, creating a lot less value for huge bettors. Pool size will suffer big time.

Horse racing has been on a major downhill slide, especially the last 10 years, as total handle continues to diminish. Why? Horse racing's failure to compete with other games of chance. Instead of moving closer to optimal takeout, California went the other way and has put another nail in horse racing's coffin.

WHO SHOULD BOYCOTT GAMBLING ON CALIFORNIA RACING?

1. Any Horseplayer who gives a damn about horse racing's future. The sooner a boycott like this works, the quicker this takeout hike will be revoked. Handle will drop over time as explained above, but sometimes it does take a year or two to see the economics work. If the boycott is successful, the thought of raising takeout anywhere in North America will become a non issue.

2. Anyone who loses or breaks even betting on California tracks. It is only going to get worse. As for those who win at it, your days are numbered, you might as well boycott. The whales will still suck the value out of the pools and their will be a lot less dummy money in the pools.

2. Racing execs and California horsemen. Horsemen especially better learn how to bet more if they want to keep their purse structure half decent. Won't happen, but they should still try.

3. Those who consider horse racing to only be a sport or a form of entertainment other than gambling. That should account for a couple of hundred bucks in handle a day in total.

4. Mindless gamblers who just don't give a crap about anything but betting where it is convenient to do so. This is the major group that the California "brain-trust" is counting on.

5. Bettors who can still actually make money long term playing California racing. I still have a problem with anyone shelving the good of the game concept for profit, but business is business. Now, I'm talking about people who really do make money, and that list isn't very long as even a 20.68% takeout is way too high.

The Player's Boycott is now starting to receive a lot of ink on the internet:

There is no reason not to bet as much as you usually do. You can simply divert it to other tracks like Tampa Bay which continues to lower takeout gradually, Hialeah (yeah I know, quarter horses) which has a 12% takeout on all bets, or Gulfstream which is also cognizant when it comes to lowering takeout to grow business. This way horse racing doesn't collectively suffer while California and any other jurisdiction that is thinking of upping takeout rates learns a valuable lesson which will lead to growth.Sign up for PlayersBoycott.org here.

10 December 2010

In case you haven't seen this yet, a video of a duck and her ducklings at Woodbine during a high wind. Over 4 million hits. When was the last time a horse racing website got 4 million hits? Well here it is:

Funny, yes, but I see something more in this video. Something symbolic. The mother duck took newbies to the track, and they got blown out by Woodbine's high takeouts. They were unable to last very long, and they are likely not to return to Woodbine again. There is a computer term called Baby Duck Syndrome. It has to do with imprinting. Baby ducks bond with the first moving thing they see. It doesn't have to be a parent. In computer land it has to do with newbies having a tendency to stick with the keyboard, software programs, etc. that they were first exposed to.

Now in psychology, it has to do with keeping up with the status quo, and not trying different things. Hmmmm, sounds like what has plagued horse racing for years and years, especially when it comes to pricing the product and appeasing Horsepeople instead of Horseplayers.

The ducks are also going to take a gander at Hialeah, which has a 12% track takeout on all bets. They don't really understand quarter horse racing, but they are willing bet a few bills at a lower takeout venue after their not so pleasant experience at Woodbine.

The ducks have been educating themselves on the internet since their first exposure to horse racing, and they've decided to boycott California racing due to the upcoming takeout hike which comes into effect on December 26th. I wonder if it was the ducks who started this rumor that has shown up on Youtube:

I can't finish this post without applauding Woodbine (sort of) for bucking the industry trend and increasing handle. The fact handle dropped a little domestically was very predictable, because of their high takeouts and their continued practice of underpaying Horseplayers on many exotic wagers (they chase domestic Horseplayers away and have an impossible time creating new ones, as new Horseplayers will only get involved significantly if there are visible long term winners).

3 December 2010

Hialeah opens their short quarter horse meet today. They are doing something phenomenal for Horseplayers: A 12% track takeout on all wagers. Many studies suggest that the optimal takeout for horse racing is somewhere between 10-12%, the optimal takeout being the price where tracks and horsemen make the most money.

Last year, Hialeah only did around $100,000 a day in handle. Wouldn't it be great to see that number double or triple this year thanks to increased churn and meeting many a Horseplayer's desire for lower takeouts? This is a great opportunity to give the industry some hard core evidence that lowering takeout will work.

The problem with this takeout reduction is that many internet betting sites are not offering Hialeah to their customers.

It makes me question whether there is a conspiracy going on. It is no skin off an ADW's nose to add a track. Why then are Twinspires, TVG, XPressBet, HPI, and NYRA Rewards not offering Hialeah? When I looked at their menus this morning Hialeah was nowhere to be found.

The fee that Hialeah charges for its signal is most likely minimal, and there will be a lot more churn thanks to the takeout reduction, so the argument that they are not making enough money is bogus. Besides, the overwhelming majority of smaller ADWs have Hialeah on the menu.

To my knowledge most, if not all of the major ADWs offered Hialeah last year, so the excuse that there is not demand for the product doesn't wash either, because if anything, there will be more demand this year thanks to the lower takeout.

Does the fact that California will have a takeout increase in place come December 26th have something to do with it? Or that a few of these ADWs own racetracks that have much higher takeouts have something to do with it? Do they want this venture to fail so that pressure is not placed on them to lower takeout?

One thing is certain, ADWs not offering Hialeah do not have their customer's best interest at heart. In fact, the customer is being completely disregarded.